Crisis Management

St. Louis and Detroit long have had a lot in common as perpetually downtrodden buckles on the Rust Belt, capitals of traditional industries (autos and food processing), and strong outposts of provincial Midwestern thinking and capabilities. Now they share something else: abandonment by their most beloved corporate citizens.

Many of America’s biggest companies are struggling through some of the most difficult times in their histories—Campbell Soup, General Motors, Hewlett-Packard, IBM, McDonald’s, Procter & Gamble, RadioShack, Target, Wal-Mart and Whole Foods among them. But the most woebegone of all might be Sears.

Last week The New York Times published a highly unusual letter of resignation from Greg Smith who signaled his departure from Goldman Sachs with a public rebuke of practices he alleged were harmful to Goldman’s customers. The fact that such a letter was prominently featured by Times editors suggests they gave its contents a high degree of credibility even though no specific examples of wrongdoing were offered by the disaffected former employee.

When faced with serious recalls in late 2009 and early 2010, Toyota had important strategy decisions to make. Though they knew that there were not any engineering flaws (as NASA confirmed in 2011), Toyota decided to take the blame. Instead of pointing fingers, the Japanese automobile manufacturer dealt with the crisis in a way that made them stronger as a brand. What can other companies learn from Toyota's PR nightmare?